EU’s milk quota system, which was firstly introduced in 1984, will be officially abolished as of 1 Apr 2015. This move is likely to have a great impact on the structure of China’s dairy market and will bring more imported EU dairy products into China.
Over the course of the last decade the EU has witnessed an exponential increase in demand for dairy products from oversea countries, especially from China. The quota system (which was originally implemented to prevent milk over-production and devaluation of stock within EU) has by and large stifled the full potential of the EU’s dairy sector. Some member countries have opted to deliberately exceed the quotas allocated to them despite the monetary penalties to ensure their market share abroad. To meet the demand of foreign markets EU has announced the cancellation of the milk quota beginning on 1 Apr 2015.
“After EU cancels the quota system, there will be changes in global milk volume and even in the production structure for milk” says Wang Dingmian a dairy expert from China. Considering the strong dairy farming traditions and numerous large scale manufacturers within the EU it is possible to realize a 1-2% increase in global milk volume with the cessation of the quota system and the accompanying increase in productivity. Mr Wang believes that China will be the primary target market that European countries will fight for. China’s great demand for imported dairy products is based on people’s distrust of domestic products. It is expected that many EU manufacturers will refocus their attention from eastern European markets to China.
As one of China’s most important dairy trade partners the Netherlands has kept one step ahead of many of its EU counterparts in terms of developing and maintaining good relations with the Chinese government exemplified in the signing of a historic agreement between Dutch dairy experts and the China government to jointly develop new best practices for China’s industry. Other key European dairy producers such as Ireland and Denmark have also been seeking opportunities in China ahead of the abolition of quotas.
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